On January 1, 20X8, Alaska Corporation acquired Mercantile Corporation's net assets by paying $160,000 cash. Balance sheet data for the two companies and fair value information for Mercantile Corporation immediately before the business combination are given below:
Alaska Mercantile
Book Value Book Value Fair Value
Cash $200,000 $30,000 $30,000
Accounts receivable 40,000 22,000 22,000
Inventory 120,000 25,000 36,000
Patents 50,000 20,000 40,000
Buildings and Equipm. 330,000 250,000 150,000
Less: Acc. Deprec. -140,000 -150,000
Total Assets $600,000 $197,000 $278,000
Accounts payable $85,000 $55,000 $55,000
Notes Payable 100,000 80,000 80,000
Common Stock:
$5 par value 120,000
$2 par value 20,000
Additional Paid-In Capital 140,000 25,000
Retained Earnings 155,000 17,000
Total Liabilities And Equities $600,000 $197,000
Required:
Prepare the journal entry to record the acquisition of Mercantile Corporation.